To consider the Internal Audit Annual Report 2012/13 and the assurance from the Performance and Audit Manager on the level of internal control within the systems audited during the year.

10.1           Attention was drawn to the report of the Performance and Audit Manager, circulated at Pages No. 52-56, which provided Members with a summary of the internal audit work undertaken for the financial year 1 April 2012 to 31 March 2013, together with an opinion on the overall adequacy and effectiveness of the organisation’s control environment.  Members were asked to consider the report and the assurance that overall a satisfactory level of internal control existed within the systems audited during the year.

10.2           Members were referred to Page No. 53, Paragraph 2.2, of the report which explained that a number of days within the Internal Audit Plan had been allocated for corporate improvement work during 2012/13.  In addition to the traditional assurance work undertaken by internal audit, this could be seen as ‘added value’ work.  This had included: production of a new Procurement Strategy; update of the corporate signatory list; audit of Business Grants scheme; audit of inspection regime for Council-owned playgrounds; provision of initial administrative support for the office refurbishment project; production of a Tree Management Policy and methodology for the inspection of trees; and risk management.  The Internal Audit Team was also represented on key corporate groups such as the Corporate Governance Group, Equalities Steering Group and Programme Board as well as the Procurement Group and Business Continuity Group which were to be reformed during 2013/14.  The audits which had been undertaken in respect of key financial systems and service-related audits were set out at Paragraph 2.4 of the report. 

10.3           In terms of the opinion on the overall adequacy of the control environment, Members were informed that internal audit provided a split opinion which meant that individual opinions were given for different parts of the system being audited.  A total of 73 opinions had been issued during 2012/13, the majority of which were good or satisfactory.  Four limited opinions had been issued; Playground Inspections and Creditors which had been discussed in detail under the previous Agenda Item, and Section 106 Agreements and Trade Waste which had previously been reported to the Committee.  Follow-up audits would be carried out for all four of these areas during 2013/14.  Although there had been no fraud issues identified or reported to internal audit during the year, there had been one minor incident at Cascades, the theft of a £20 float from the cash register, which had been reported to the Committee in September 2012.

10.4           A Member sought clarification as to what was meant by a satisfactory audit opinion and was informed that this was defined as ‘a sufficient framework of controls – provides satisfactory assurance – minimal risk’.  In response to a Member query, the Director of Resources explained that the regime to control housing benefit fraud was specified by the Government.  The Government set targets for local authorities and there was an additional item in the annual audit fee for claims and returns, the largest of which was the benefit return.  This was scrutinised every year by external auditors on behalf of the Government and it was noted that the Council had never received a qualified opinion to date.  The Council employed a Fraud Investigation Officer who looked at specific cases and compared lists from different organisations to identify any anomalies, for instance, claims for single person occupancy, and investigated these cases.  The Audit Manager from Grant Thornton advised that the Audit Commission required the external auditors to review the progress made in respect of the responsibilities within the National Fraud Initiative and the matches of data which suggested a risk of fraud.  Grant Thornton had recently returned its response and Tewkesbury Borough Council had been given a ‘green’ status which meant that adequate arrangements were in place.

10.5           It was

RESOLVED          That the Internal Audit Annual Report 2012/13 be NOTED.